Maui Chamber

I just want to start by thanking the Legislature and letting you know that you are well represented in the State Capitol and they’ve done a terrific job.

You might have noticed that there’s not so much in the news about the confrontation between the Governor and the Legislature, and I do think that that’s by design. We have had so far, two tremendous sessions, I think amongst the most productive in a long time. The legislation to transition the Maui region hospitals was definitely a product of the Governor’s office working with the Legislature to put the community first and find a way forward that delivers better healthcare for all of you.

I do want to tell you that the headlines aren’t as dramatic or confrontational but that we are definitely getting more done on your behalf. I think it’s a great opportunity to be here on Maui to talk about some of the things that we’ve been working on. I do know that we needed to make things right in order to make things happen, and we’ve been focused over the last 18 months about making sure that government can be more efficient, effective, and productive on behalf of you.

One of the prime examples in this session I think of is the collaboration between the Legislature and the Executive. It really is about our young people and the schools. As you may recall this time or so, maybe a little later in the summer, it was the worst conditions in our public schools all across the State. Clearly, whether you believe in global warning or not, last summer was among the hottest on record. I’m proud to be able to say that working with the Legislature, we’ve found a way to commit to cooling the classrooms and creating a much better environment for our young people to learn.

We are working on the hottest schools first and I just want you to know that we are both committed, the Legislature and the Executive, on really getting to all the schools. We are starting with those that are the hottest. Four Maui schools are in the first round of projects. Maui High, Kalihi Kai, Lahaina Intermediate, and Princess Nahi’ena’ena are about to get started and there will be many, many more. The Legislature and I made servicing our kids and making sure that their environment for learning is a much better environment and we look forward to doing a lot more for our students.

I talked about the fact that it was a bittersweet moment for me. We had a bill signing this morning at the ILWU Union Hall to acknowledge the closing of sugar operations at HC&S. The Legislature moved forward a couple bills to really help the people on Maui who have been affected by the closure of HC&S and by the Makena Beach and Resort.

We, 2,800 county residents here in Maui, lost their jobs as part of that. We do know that there will be a period of transition because sugar has been such a part of our community. It’s such a part of the social fabric. It’s definitely sad to talk about the last harvest of sugar anywhere in the State of Hawai‘i. But we did have a bill signing for two measures, House Bill 2722 and House Bill 2605, which provide extended unemployment benefits to help those affected to get 13 weeks additional unemployment benefits to help in the transition if you are unable to get a job. And we also are providing job training, counseling and other services to help in the transition.

We have had rapid response people on Maui since the announcement of the closing. We’ve been working with employers trying to provide every opportunity to match those who are losing their job with other funding opportunities. So we continue to be hopeful. We do know that the future looks bright for Maui County and we do believe that these measures allow us to make a smoother transition for those most impacted.
I know that Mary Ann talked a little bit about our system and I just wanted to let you know again that we are committed to the transition at the Maui facilities of the Hawai‘i Health Systems Corporation. We are negotiating with the UPW to find a solution.

I just got a text this morning that we were successful in the Ninth Circuit Court of Appeals to narrow the injunction so that the transition activities can continue. So we are in the process of defining exactly what that means and then working with the UPW and others involved to agree on a new transition date so that Mary Ann can begin to plan all of the activities that are involved with transitioning for the Maui Health Systems Corporation, a brand new entity to take responsibility of managing those facilities.

I just want to let you know a couple things. I have had direct conversations with Dayton Nakanelua and UPW, and he has assured me that one, he is willing and will not ever put the health and safety of the Maui community at risk. He is committed to ensuring that Maui Memorial Hospital and all of the facilities can do whatever it takes to deliver quality health services to the people in Maui during this transition. We have been working to ensure that no break in service occurs.

So we continue to work with making transition happen. We do understand that it’s historic and it is the first time in the history of the State of Hawai‘i that anything like this has ever happened. So we are confident that we will be successful in moving through this transition.

Our administration is about collaboration and working with the Legislature, and all of you involved are really trying to create a better environment, a better business environment. We do know that the hospitality industry is the most important industry, and facilities here on Maui are so important to keeping our economy moving. We do know though that it’s about doing the right things in the right way for the right reasons and we will continue to move with that philosophy as we move forward.

We have accomplished a lot of things I think that are helping but there are many challenges. I would like to talk a little bit about what I think is one of the biggest and most challenging and that’s really homelessness.
We have been focused on aligning and working at all levels of government, federal, state and county, to really attack and put the resources of each government entity together and see how we can work in concert to really begin to tackle the challenge of homelessness. So I thank Mayor Arakawa.

We’ve been working on a couple projects. As you know, I issued an emergency proclamation and we’ve been working with the counties to identify the homeless projects that the community needs, and working together to provide housing to our communities.

This past year the Legislature appropriated $12 million to allow us to move forward on homelessness. We have focused on three strategies of utilizing three levers of change that we believe are essential to addressing and reducing homelessness in our community.

The first three is about housing. Our challenge today is that we don’t have sufficient housing for our residents and this past session we passed a very aggressive housing package that begins to address the issue of affordable housing. The Legislature appropriated $75 million into the government revolving fund, the rental assistance fund.
We worked with developers on identifying those bottlenecks in the State process, those bottlenecks that the State can control to really deliver housing and affordable housing more quickly and more affordably. So there was a significant package passed this year that allows us to move forward with more affordable housing all across the State.

We are also working with you and the private sector. We’ve scheduled a landlord summit. That’s scheduled for June 20th, 10:00 a.m. at the Maui Beach Hotel. We do know and we have been working with landlords to make them aware of the benefits of renting to those who qualify for rental assistance. We’ve had terrific response from the private sector. We’ve had excellent results in making more permanent housing available for those who can at least afford it all across the State. So I certainly would encourage those of you who are military or know of landlords who would want to participate. We know that these events have been successful in making more spaces available for those who can least afford it, and that has a direct impact on getting people off the streets.

The second lever is really about services. We do know that it’s not only about making housing available. It’s really about providing a supportive environment and most of that 12 million dollars that have been appropriated will really be to provide services directed to those who are homeless and to help them with substance abuse or mental health issues that keep them on the street.

Last year as part of the emergency declaration, we entered into a contract with AUW to directly provide services. We are very specific to allow flexibility because as we drill down into this homelessness crisis, we do understand that virtually each individual has different needs and it really is about trying to respond to those specific needs to get them off the street and into a shelter.

These services — the AUW has partners across the State — are looking at different ways that they can help people not become homeless or to help those who are homeless find permanent housing. We will continue with the services because we know that it’s so important to getting people off the street.

The third lever of change really is about public safety. We keep public spaces public for the rest of us in the community to enjoy. This past session we asked the Legislature and they responded so that we can create an enforcement and stored property program. When homeless are taking up residence on public spaces, State public spaces, we can respond and help them choose to be in a shelter because we will be certain that there will be one available but we are not going to make it clear to them that public spaces are for the enjoyment of the people and that we will continue to keep public spaces public.

We are encouraged by the response. We have been successful in moving people off the street. We know that it’s a huge challenge with more than 6,000 homeless all across the State and we know it’s a problem, and homelessness has been in each and every community.

We are committed to working with federal, state, and county governments to pull resources and find solutions that work. I look forward to reducing the number of homeless all across the State as we move forward.
I do take the responsibility, as governor, of really managing your tax dollars in the best way that I can. We’ve been focused, as I said, of making government right so that we can make things happen.

We just completed our second bond issue of this administration and we went to the competitive process of bond handling and we got the lowest cost of bond issuance in the history of the State of Hawai‘i. So we are excited. What does that mean to you? It means that we can do more with your tax dollars because we’re getting better interest rates. We are able to issue the bond at the reduced cost and we refinanced higher priced bonds, and we’ll get directly $32.8 million in savings of debt service over the life of the bond.

We do know that the economy is doing better so we’ve asked the Legislature to join us shoring up the financial condition of the State, and put back into those reserves which is so important to prepare us for the next downturn. The Legislature agreed and we deposited $150 million into the rainy day fund so that we can be prepared for the next downturn in our economy. We added $82 million in addition to pay down the unfunded liability of the OPEB responsibility to our state and county employees.

All together it’s about a quarter of a billion dollar investment in ensuring that our financial condition will be prepared for the next downturn but more importantly, it reduces the long-term cost of government because putting those funds aside today means that we will pay less in the future as we move forward. So we are definitely in a better financial situation today than ever before.

Public schools. I talked a little bit about air conditioning at the beginning but Congress passed just before the end of last year, the Every Student Succeeds Act which is the first rewrite of the public school law for Congress in more than a decade. We have suffered under the No Child Left Behind Act for what I think is much too long.
It’s the first time we’ve had a situation where our law guarantees that every public school would be labeled as failing.

The standards and expectations that were in the federal law meant any educator knew that it was impossible for any public school to meet that. And finally, Congress passed the Every Student Succeeds Act.You may have read that we formed the Governor’s Task Force on implementation of the ESSA Act. We put together a team that has been meeting every other week for the last six weeks to talk about the future of public education. I’m committed to building the best public education system in the country. I believe we can do it. I’ve seen our students from all over the State, many from Maui, compete in national competitions and win. So I know that our students are amongst the best in the country.

I’m committed to using this ESSA Act and the opportunity that Congress has given to the State. The primary focus of the ESSA Act is really restoring and returning to the State the authority or most of the important criteria in public education. Our ESSA team is working with State legislators. Please stay tuned, we have a summit, an education summit that is scheduled for Oahu.

When we first thought about this idea, about inviting people to come and talk about public education and talk about things that work and things that don’t work, we had thought that maybe there’d be 200 people interested. In the first day, even before we publicly announced it, we just put up the sign up on my website and we didn’t even publicly announce it that it was available, we had 300 people sign up to participate in the education summit on July 9th. I just talked with the people involved with planning the program and we have over 800 people from around the State who want to come and meet and talk about the future of public education in Hawai‘i.

I’m so excited. The ESSA team is so excited. The public response has been tremendous and for those of you who are planning to do it, we invite you to come to Oahu. Sorry it’s on Oahu, but the summit is scheduled for the Convention Center on July 9th. But we are having town meetings all across the State. We are working with your legislators to schedule town meetings on Maui. There will be town meetings on Maui so that we can get your input. If you go to the Governor’s website, we have all the minutes of the ESSA Task Force. The activities that they’re undertaking, but looking at those things that work and those things that don’t work in public education, really committed to creating a public education system that is the best in the country. So please join us as we re envision public schools for the future.

I started by talking about the end of sugar in Hawai‘i but we are focused on what’s next. It took 50 years for us to transition from agriculture to hospitality and clearly, hospitality in the State of Hawai‘i is the number one industry. More importantly, Hawai‘i as hospitality is the number one brand in the world.
The challenge for all of us here is what’s next, right? What is next? What opportunities do our children have to live, work, and play in Hawai‘i in the future? Now that hospitality is fully involved and we will be growing, but will it have the job pool that we had over the last 50 years?

Well, I believe it’s about innovation. It truly is about those opportunities for us. It’s about intellectual property. It’s about creativity. It’s about encouraging our young people to be bold in a vision and how they can help us. So we at the Capitol have been working to create a better environment for innovators and entrepreneurs.

Thanks to the Legislature, they appropriated $8 million for a wide variety of programs that help us encourage small business development. There’s support for accelerators and there’s been a number of accelerators that have been created, supporting entrepreneurs. It’s about supporting manufacturing, and I know the Chamber has been a strong advocate for providing grants to our small businesses so that we could develop the capacity to manufacture more so we can export.

So we are looking at all levels and spectrums of businesses, thinking about how we can encourage innovation, working with the university, creating that atmosphere and environment to support entrepreneurs and those creating new businesses because we do know that job creation in the future will come from the innovation sector.
I’ve been in government and public service now for 30 years and I do know it really is about changing the cultures in state government.

I’m committed to making state government more efficient and effective and deliver better services to you. I know it’s about change in the culture and I’ve been out meeting with the public servants. I do know that public employees are the most important asset that we have. We’ve been encouraging that.

I do think that public servants in the communities have been the scapegoat for everything that doesn’t work in government, but I do know that most of them are hardworking, dedicated public servants who really have committed to serving you and we’ve been making investments in them, encouraging them to help us, give us solutions to find a way to be more efficient and effective. We have been focused on making investments to give our employees the tools that they need to deliver better services to you.

I led the effort to take the Legislature paperless a number of years ago, and we are focused on doing that for State government. We implemented an E-sign program last summer. The Governor’s Office led the way by being the first one to register. We’ve converted more than 11,000 employees to be on the cloud. We have processed more than 28,000 signatures particularly just in the six months that we’ve been in place. And more importantly, we are identifying ways that we can make government more efficient and effective each and every day.

Tax system modernization. You might have remembered last year at this time all the stories about delays in income tax and the problems with the whole tax system. There wasn’t a single story this year about delays in processing tax returns. And why is that? We successfully implemented Phase 1 of tax modernization on December 15th of last year and that really was the focus on processing. So we have processed tax returns smoothly this year with minimal delay.
We continue our efforts to identify tax fraud and we have counted more than $30 million of fraudulent returns that we stopped, are investigating, and taking action on.

For those of you with small businesses that might have counted on the float when you write checks to state government because it used to take us 45 days to deposit checks — we implemented the drop boxes and now we are depositing checks on the same day received. So if you guys counted on the 45 days of float, it’s over. I believe it’s about being responsible for taxpayer funds. If you really think about it, if on average it would take 45 days to deposit the check, we generate about a hundred million dollars on average in tax collections every week. Then 45 days is a half billion dollars of float that’s in the system, and we reduced that to same day deposit.

The second phase of tax modernization is scheduled to be completed August 15th and that’s GET and TAT. For those of you involved with those, we expect that we’ll be on schedule. Those are the next largest portions of tax collections, we definitely will be more efficient and effective in collecting those taxes. So we continue our efforts.

There was a lot of talk about the backlog in the highway fund. We made more than a hundred billion dollars of reduction in that backlog. I spoke to Transportation Director Ford Fuchigami just before coming over here. Our optimum target for what should be in the highway fund at any given point in time is $450 million. When I talked to Ford before coming here, he said we’ve got the fund down to $500 million. So we’re about a $50 million away from where we believe we need to be in terms of making that fund work. Remember, when we started this, we were above $800 million. So it really is about making things right to make things happen.

I just really wanted to thank you for giving me the time here. I do know we want to be able to take questions so I’m going to end it here, but I just want you to know that the Legislature and I continue to work together to identify those things that are most important to you. We’ve had two tremendous sessions and I do anticipate to do even better as we move forward, but I want you to know that I take the job, honor and privilege of serving as your governor very seriously. We are making government more efficient and effective and we hope to be able to deliver better services for your tax dollars as we move forward.